The rate of home price appreciation will post a modest decline next year following several years of steep increases, while the sales pace will decrease as the market stabilizes throughout 2007, according to the CALIFORNIA ASSOCIATION OF REALTORS®.

The median home price in California will decline 2 percent to $550,000 in 2007 compared with a projected median of $561,000 this year, while sales for 2007 are projected to decrease 7 percent to 447,500 units, compared with 481,200 units (projected) in 2006.

The 2006 Use of Technology survey has been released by the C.A.R., in which it indicated that 95 percent of REALTORS® have a high-speed Internet connection at home, an increase of 90 percent a year ago; 47 percent of REALTORS® use e-mail as their primary form of communication with their clients; 61 percent of REALTORS® post listings to their own Web site; and 87 percent use the Internet for marketing and farming purposes.

Significant new laws for 2007: (C.A.R.)

q       No more conditional salesperson license:  Starting October 1, 2007, a person must complete three real estate classes before applying for the real estate salesperson exam.  Exempt from this requirement are attorneys and those qualified to take the broker exam.  Currently, nearly 85 percent of new licensees obtain what is called a “conditional salesperson license,” enabling them to conduct real estate licensed activities upon completing merely one class and promising to take two more classes within 18 months.    AB 2429 raises the bar for new licensees by eliminating the conditional salesperson license.

q       Tax alternative to 3.33 percent California withholding:  Effective January 1, 2007, sellers required to have 3.33 percent of the sales price withheld for income tax purposes may elect an alternative withholding.  The alternative withholding is an estimate of the seller’s tax liability calculated by multiplying the recognized capital gain by the highest state tax rate for individual taxpayers (or the corporate tax rate for corporations), regardless of the taxpayer’s actual tax bracket.  Under existing California law, a buyer must withhold 3.33 percent of the sales price from the seller’s proceeds unless an exemption applies, such as when the property is the seller’s principal residence, the property is in a 1031 exchange, or the seller will not realize any capital gains.  The new law applies to non-exempt sellers who may now elect to have less than 3.33 percent withheld.  A seller opting for this tax alternative withholding must certify the amount to be withheld in writing under penalty of perjury.

q       60 day notice to terminate revived:  Beginning January 1, 2007, a residential landlord must generally give a 60-day notice to terminate a month-to-month tenant.  However, a 30-day notice to terminate is permissible if any tenant or resident has lived in the property for less than one year, or if the landlord has sold the property in the manner specified by law.  The 60-day notice does not apply to fixed-term leases (e.g., a one year lease).  It also does not apply if it is the tenant, not the landlord, who terminates a month-to-month agreement, in which case the tenant may give a 30-day notice.  To help with this new law, C.A.R. will release a new standard form 60-day notice of termination, which will also set for the requirements forth the 30-day exception when landlords sell their properties.  The law will sunset on December 31, 2009.

q       License revocation for advertising false credentials:  Beginning January 1, 2007, the real estate commissioner may revoke, suspend, or deny the license of anyone who falsely advertises his or her credentials, including special certifications or membership in a trade organization.  This law aims to protect consumers from unscrupulous and fraudulent lending practices.